Unusual Covered Call Opportunity in St. Joe

According to Options and Volatility, shares of St.Joe CP

saw unusually high options activity on Monday. Notably, the July 15 calls traded 2,381 contracts versus only 1,600 open interest. The July 16 calls traded 5,573 contracts as well. With volume exceeding open interest, the large buyer of these calls is initiating a new position rather than closing out an existing position. In addition to the increased volume, the implied volatility on the July 15 calls rose sharply, moving from 28.08 on Friday to 41.69 on the close Monday, an increase of 48.47 percent. While shares of JOE rose 0.16 on the day, the price of the July 15 calls rose 1.68 times that amount, or 0.27. This set up a covered call opportunity, buying shares of JOE and selling a July 15 call for each 100 shares purchased. Options and Volatility noted this captures a 1.22 percent edge and positions bullishly along with the large call buyer, while capturing the spike in implied volatility. The July 15 calls have a delta of 61, while the covered call position has a somewhat less bullish delta of 39. Disclosure: The author had a long position in JOE at the time of publishing